Michael McGrath (Cork South Central, Fianna Fail)
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8. To ask the Minister for Finance the role the restructuring board has played to date in activities of the credit union sector; and if he will make a statement on the matter. [37057/14]

Michael McGrath (Cork South Central, Fianna Fail)
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The question also relates to the credit union sector and questions the Minister about the role of the restructuring board in restructuring credit unions around the country. The board is playing an important role on a voluntary basis, trying to incentivise credit unions where consolidations and mergers are needed. However, a number of issues arise in respect of the future of the credit union movement.

Michael Noonan (Limerick City, Fine Gael)
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The Credit Union and Co-operation with Overseas Regulators Act 2012 provides the statutory basis for the restructuring of credit unions and placed the credit union restructuring board - ReBo - on a statutory footing from 1 January 2013.  ReBo is currently in the process of overseeing and facilitating restructuring on a voluntary, incentivised and time-bound basis and is working towards the timetable set out in the Commission on Credit Unions report, with a view to completing the process by the end of 2015. The Government has made available €250 million to the credit union fund for the voluntary restructuring of credit unions.

ReBo has undertaken a high level assessment of all credit unions based on financial data from the Central Bank and engagement with each credit union. To date, ReBo has facilitated the merger of 17 credit unions throughout the country and provided advice and expertise to the credit unions involved in the mergers throughout the entire process. ReBo is currently working with over 140 credit unions who have decided to pursue actively a merger strategy, along with providing ongoing facilitation and advice throughout the various stages of the process.

Throughout the process to date, ReBo has engaged with all credit unions that have been willing to engage with them and have met approximately 300 credit unions as part of this process. It has developed a standardised merger process, with supporting templates to assist credit unions which are going through a merger process. In addition to the restructuring process ReBo has also communicated to the Central Bank in regard to distressed credit unions for which it has not been able to find a restructuring solution, published various guidance documents on credit union mergers, conducted ongoing analysis of financial issues, environmental challenges and trends within the movement and engaged regularly with multiple stakeholders within the movement to include the Irish League of Credit Unions, the Credit Union Development Authority, the Central Bank, the Credit Union Managers Association and the Department of Finance.

Michael McGrath (Cork South Central, Fianna Fail)
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Many credit unions are feeling the heavy hand of regulation, particularly when it comes to lending. Lending is their core business and many credit unions have onerous lending restrictions. ReBo needs to incentivise credit unions to merge where that is the appropriate solution. We need weaker credit unions to join stronger credit unions and the regulator must allow that process to take place. In the case of Berehaven, the decision was taken to liquidate the credit union.

Bantry Credit Union has subsequently taken over the business in order that services can continue. However, other credit unions are in need of capital. Will the Minister advise the House of the €250 million fund to which ReBo has access for the restructuring of credit unions, the number of cases which have received funding and how much of the fund has been drawn down for the benefit of the credit union sector?

Michael Noonan (Limerick City, Fine Gael)
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The credit union movement is terrific and we support it absolutely and fully. Credit unions did not escape free from the financial crisis. Significant damage was done to the movement, as it was to the banks. Legislation was passed and organisations such as ReBo were established to protect credit unions. The primary purpose of everything we did with regard to credit unions was, in the first instance, to protect the savings of depositors because we did not want to see any risk to savings. That has been done. I refer to a number of high profile examples of credit unions in trouble, but, by and large, depositors have been protected almost totally. This must continue to be case. The protection of depositors has been the primary purpose of many of the interventions we have made.

I agree with the Deputy that there are many credit unions in the country, some of which are too small. The way to reorganise them is to merge them with neighbouring credit unions in order that groups will form a bigger and more financially solid entity. That process is proceeding by way of discussion and agreement, rather than with a heavy hand.

Michael McGrath (Cork South Central, Fianna Fail)
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I am hearing from credit unions that they are feeling the heavy hand of regulation. Legislation was passed to strengthen regulation of the sector because it needed to be strengthened. Credit unions have been damaged by the economic crisis, not just in their core business but also because many of them invested in expensive buildings which have had to be revalued. This is having a detrimental impact on their overall financial position. I refer to the parallel process of ongoing regulation by the registrar and ReBo which is trying the softly-softly approach as against the heavy hand of regulation. The feedback I receive is that many credit unions are prepared to change in that they recognise change is unavoidable. They recognise that because of the need to reach the necessary levels of compliance and achieve an improvement in systems and governance, the weaker credit unions will need to join stronger ones. However, there is a need for a carrot as well as a stick. The incentivisation of restructuring has to be to the fore. The money has to be made available and used because achieving this on a voluntary and co-operative basis is preferable to the regulator using the heavy stick and threatening to shut down a credit union immediately on a Monday morning.

Michael Noonan (Limerick City, Fine Gael)
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The information passed on to Deputies on credit unions usually comes from the managements or board members of credit unions that have a particular perspective. However, there is another perspective, from the point of view of the regulator whose primary purpose is to protect depositors. I suggest the Deputy invite the section of the Central Bank dealing with credit unions and the regulator of the credit unions to come before the finance committee to hear the regulator's view. There is no gainsaying it, but there are limits on lending and the regulator will explain the reasons. The regulator has to adopt a prudential approach. There is frequently a difference of opinion between the managements of credit unions and the regulator, but that is the normal tension in the business.